Private benefits of native veg on private land 

In many parts of the world, natural vegetation has been cleared to allow agricultural production. To ensure a long-term flow of ecosystem services without compromising agricultural activities, restoring the environment requires a balance between public and private benefits and costs. Information about private benefits generated by environmental assets can be utilized to identify conservation opportunities on private lands, evaluate environmental projects, and design effective policy instruments.

Maksym Polyakov and colleagues estimated the private benefits of native vegetation on rural properties in Victoria using a spatio-temporal hedonic model. They estimated the marginal value of native vegetation on private land and examine how it varies with the extent of vegetation on a property and across a range of property types and sizes.

Private benefits of native vegetation are greater per unit area on small and medium-sized properties and smaller on large production-oriented farms. Native vegetation exhibits diminishing marginal benefits as its proportion of a property increases. The current extent of native vegetation cover is lower than the extent that would maximize the amenity value to many landowners.

Given this, there is scope for improved targeting of investment in the study region by incorporating private benefits of environmental projects into environmental planning processes. Landowners with high marginal private benefits from revegetation would be more willing to participate in a revegetation program. Targeting these landowners would likely provide higher value for money because such projects could be implemented at lower public cost.

Polyakov M, DJ Pannell, R Pandit, S Tapsuwan and G Park (2014) Capitalized Amenity Value of Native Vegetation in a Multifunctional Rural Landscape. American Journal of Agricultural Economics 97(1):299-314 http://ajae.oxfordjournals.org/content/97/1/299 

5 comments on “Private benefits of native veg on private land ”

  1. onebendintheriver Reply

    Does the value include the production benefits for graziers of better stock shelter, better pasture growth, less evaporation due to wind where there is increased natural vegetation? Or cleaner water? Or drought browsing feed for stock animals? Or only for agriculture? Or only visual benefits? I’m a little confused about what a spatio-temporal hedonic model would consist of.

    • Maksym Polyakov Reply

      The value includes all of the above – visual, stock shelter, cleaner water – all the benefits that landholder derive from native vegetation on his or her property. Native vegetation generate a mix of these benefits and it is difficult to separate them. The key thing is that here we are valuing benefits that are captured by the landholder.

      Native vegetation or other similar environmental assets are not normally sold or purchased on the market, but their values could be estimated by observing landholders’ behaviour, such as how much are they willing to pay for the properties that include these assets. Having information about the prices landholders paid for the properties as well as the property’s characteristics, we can use a statistical technique called “hedonic pricing method” to tease out the value of specific characteristics of the properties, including native vegetation. In this study we used data from around 7,500 rural properties in North-Central Victoria that were sold between 1990 and 2011. This allowed us to get a good idea about the values of native vegetation across a wide range of property sizes and types.

      More about this study will be in forthcoming May issue of Decision Point.

    • Maksym Polyakov Reply

      In this study we use property size (area) in ha rather than specific size classes. The property sizes in our sample ranged between 1 and 2000 ha. By “Private benefits of native vegetation are greater per unit area on small and medium-sized properties and smaller on large production-oriented farms” we meant that as property size increases private benefits of native vegetation decreases.

  2. Wayne Cameron Reply

    Spatio-temporal hedonic model? I understand ecosystem services, but politicians have never got the hang of it. There has to be tangible and quantifiable economic benefits to make ES interesting. A better explanation must be hidden from me at present. Basically, if an economist is not involved in selling something or accepting an idea . . it stays on the shelf . . . regrettably.

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